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Citizens are starting to question Harbor Point TIF subsidies

Fells Point association will reconsider its support of Harbor Point in latest sign of growing opposition.

harbor-point-parks rendering

Artist’s rendering of high-rise Harbor Point, with historic Fells Point located at the upper right.

Photo by: Beatty Development Group

First it was a faint murmur of unease. Now it’s become a clamor for answers.

The $107 million tax increment subsidy proposed for Harbor Point is stirring up a normally somolent citizenry, which has been socked with rising water bills and cutbacks in fire protection and youth rec centers.

The latest evidence comes from a special meeting called for this Tuesday by the Fell’s Point Residents Association to revisit its endorsement of the luxury waterfront development and proposed regional headquarters of Exelon Corp.

The group had previously voted “not to oppose” the conceptual plan for Harbor Point, “but that was before many specific issues that need significant further discussion came to light,” Arthur Perschetz, association president, told The Brew in an interview today.

Too Much Public Subsidy

“The biggest concern by residents is that the city is dedicating hundreds of millions of dollars for a project that is basically a private development,” Perschetz said.

“Yes, it will produce some jobs,” he continued, “but it isn’t going to start paying anything back to the city [in the form of property taxes] until 2025. That’s what people are feeling – there’s too much subsidy for a site that the city itself says is one of the best locations on the East Coast.”

The group has invited Marco Greenberg, vice president for developer Michael Beatty, and Ronald Kreitner, director of Westside Renaissance, to “explain their viewpoints and answer our questions,” according to Perschetz.

Kreitner, a former director of the Maryland Office of Planning, is associated with Baltimore Orioles owner Peter G. Angelos, who has signaled his opposition to the Harbor Point plan.

Greenberg has been a senior executive at both Struever Bros, Eccles & Rouse and John Paterakis’ H&S Properties Development, who jointly held a ground lease at Harbor Point before they were reportedly bought out by the Beatty group.

“Gold-Plated” Parks?

The use of $59.1 million to finance parks at the site – and an additional $21.6 million for a waterfront promenade – has stuck in the craw of association members, Perschetz said, especially when the city spends so little to improve existing public spaces and its major parks are in disrepair.

The group’s membership will take a fresh vote on Harbor Point on Tuesday – and a rejection could have a direct impact on the evolving political calculus of the project.

Considered a “shoo-in” when proposed two months ago by Mayor Stephanie Rawlings-Blake, the $107 million TIF subsidy has been vigorously questioned by Carl Stokes, chairman of the City Council’s Taxation, Finance and Economic Development Committee.

Record crowds attended two hearings before Stokes committee last month.

They included members of the Campaign for Fair Development, associated with the United Workers union, and residents from Perkins Homes, who accused the city of using their low-income demographics to secure a state “EZ” (Enterprise Zone) designation for Harbor Point that give the developer $88 million in tax breaks.

Earlier this week, a petition drive opposing the subsidies began circulating on the Internet.

Perkins Homes residents question tax subsidies to Harbor Point at a City Hall hearing last month. (Photo by Mark Reutter)

Perkins Homes residents question tax subsidies to Harbor Point at a July 10 City Hall hearing. (Photo by Mark Reutter)

Councilman James B. Kraft, whose 1st District includes Fells Point and Harbor Point, says his support of the TIF subsidy – on top of the “EZ” tax break – is based on neighborhood support of the project. He publicly promised last month to vote on the project’s financing package according to the wishes of the community.

That vote may come as early as August 12.

Mayor Rawlings-Blake and City Council President Bernard C. “Jack” Young want to get the financing bill out of Stokes committee this week (a working session of the committee is set for 5 p.m. Wednesday in the City Council chambers).

TIF Needed ASAP

The Beatty group is under enormous pressure to secure the TIF package before the end of September, when his group is set to purchase the capped portion of the 27-acre site from Honeywell International, the present owner.

The Allied Chemical chrome works was closed in 1985 in part because of its extensive pollutant of the harbor. (Photo by John Horn)

The Allied Chemical works was closed in 1985 in part because of its extensive pollution of the Inner Harbor. (Photo by John Horn)

The Harbor Point site was used as a chromium-ore reduction factory for more than a century.

It was closed by Allied Chemical in 1985 after environmental regulators determined that 62 pounds of cancer-causing chromium waste were being dumped into the harbor every day.

The site underwent a decade-long remediation to contain the chemical wastes buried under the factory. Allied first constructed a stone embankment around the three sides of the site that bordered on the harbor.

A three-foot-wide soil-bentonite hydraulic barrier was then extended more than 70 feet deep between the land and water, and a plastic-and-clay cap laid on top of the ground to seal off the contaminants.

Without TIF funds to finance the “public” portion of the development – which will be elevated on fill above the cap –  the $1 billion project cannot move forward, according to Beatty.

Will Exelon Walk?

Exelon Corp. is the only announced tenant for the complex, projected to take 12 years to finish and create more than 3 million square feet of new office, retail and residential space.

There is growing worry in the developer’s camp that Exelon might back out of its commitment to the site if the City Council does not approve the TIF legislation in the very near future.

If that did happen, the company wouldn’t walk far.

Under a February 2012 agreement with the Maryland Public Service Commission that permitted its acquisition of Constellation Energy, Exelon pledged to build a new headquarters building in downtown Baltimore.

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  • trueheart4life

    I wonder if filing a formal complaint with the Maryland Public Service Commission objecting to the public subsidy Exelon Corp’s chosen developer, Michael Beatty is demanding of BMore citizens will nulify their February 2012 agreement? Maybe I’ll submit one this week and send along a note asking Gov. O’Malley to take back this gift … We can’t afford it!!!

    • Gerald Neily

      Kim, to clarify: The Maryland PSC’s agreement with Exelon entirely precedes Beatty’s Harbor Point agreement with Exelon. Exelon has agreed to keep its new Constellation subsidiary somewhere in Baltimore regardless of whatever promises or “gifts” have been or may subsequently be made by Beatty, BDC or anyone else.

      • trueheart4life

        Thanks Gerald … I’m still considering a complaint, it’s the only opportunity for the public to complain officially, other then to our do nothing/inept City Council. The precedence of the agreements is irrelevant because the bottom line is we get screwed by both, serially, but likely in parrallel if this deal gets approved. Exelon needs to build some place else.

  • baltimorebrew

    This comment came to us via email tonight:

    There are better places in Baltimore for Exelon to build. Harbor Point lacks access to public transportation other than buses. If the city were to give Exelon a piece of city-owned property near already established or proposed transportation lines WITHOUT tax breaks, it could have the dual benefit of collecting taxes more expeditiously and not adding to already congested roadways. Another benefit could be more incentive for building the already proposed Red Line if a piece of suitable city-owned property could be found along that route.

    Mair

    • Day_Star

      We can’t force a private company to make its headquarters wherever we please. Ideally, they would be in downtown by Subway/MARC. If Excelon is going to be in Baltimore City, they want their headquarters to be magnificent and that’s what they’ll get at Harbor Point.

  • Lizzie 58

    What is appalling to most City taxpayers is the sheer size of this hundred million dollar TIF for Harborpoint, plus the $27 Million of other City transportation funds. This deal is the A-Rod of publicly subsidied projects. It represents all that is wrong with the BDC and the Mayor with their focus geared exclusively to the waterfront, while other city neighborhoods are ignored. It represents benefits to Michal Beatty, a developer who has received public subsidies on every project that he has been involved with during his career in Baltimore trying to hold the taxpayers hostage for more (“No hundred million dollar TIF, no Harborpoint”); and Exelon, a Chicago-based utility company, which could care less about how much the developer takes from the City taxpayers. While many, many City taxpayers oppose this project, more powerful interests control the Mayor and the City Council. It is not by accident that the developer is represented by top lobbyist, Steve Kearney, and lawyers, Gallagher Evelius & Jones.

    The developer will get his eight votes in this Council (Beatty will cough up something before the Wednesday Council hearing that looks like a benefit back to the City, however contrived).

    • Day_Star

      New York, DC, where have you, TIF financing is used to make projects like this a reality. To infer that TIF financing is a taxpayer subsidy and implies corruption is simply wrong. Without new development which spawns new tax assesments and increased tax revenue — which is wholly paid by the developer/property owner — a TIF’s value is $0. You and I as tax payers are putting $0 into the TIF.
      Enterprise Zones, however, ARE a tax subsidy and should be the focus of the complaint. Believe it or not, it is possible to be pro development, pro TIF, but critical of or against the EZ designation. I hope a public benefit is negotiated; this TIF holdout is simply a negotiation ploy. Without the TIF, this project won’t happen.

  • Matthew Danowski

    Folks, the current Harbor Point/Allied Chromium land is a toxic waste site that currently produces little or no tax revenue for the city. The Tax Increment Financing (TIF) will use projected tax revenue from the development to invest in infrastructure in the near term. The key phrase here is “projected tax revenue from the development”. If Harbor Point doesn’t go through, that projected tax revenue doesn’t exist. The subsidy for this project is not coming from the general fund. There are no choices being made about spending money here versus somewhere else. The city is borrowing against future tax revenue at this site to make improvements now.

    That means that unless Councilman Stokes has another developer lined up who is going to do something with the site without TIF, the city would be forgoing quite a large development of currently unwanted land for no apparent reason. Given the fact that the site has been cleaned up since 1999, I don’t think that is the case. We all know that he is just preaching against big bad rich people for his next mayoral campaign. Personally, I think this is going to backfire big time for him and we will get to look at parked H&S bakery trucks for the next 20 years.

    • Josh Hall

      There’s a huge cost however associated with that development that does
      basically impact the general fund, changing the math from simply a 100
      million TIF into something much much greater due to the impact of the loss of State aid
      for education and interest payments on the TIF (as well as the 100
      Million EZ designation) . All of which is only being done to raise
      profits from 10 percent to 14 percent for the developer.

    • Gerald Neily

      Mr. Danowski, I’m glad you think this will remain an H&S Parking lot (with Exelon going somewhere else in the city) until such time as a developer emerges who will do it with a smaller TIF that covers only needed infrastructure. As far as whether this is “unwanted land”, I’ll take it.

      • Matthew Danowski

        Who, Mr. Neily? The Allied Chromium plant has been defunct since 1986 and cleaned up since 1999. Going on almost 30 years since the site was productive and who has stepped up to do something with it? When is this magical investment going to swoop in, take a ridiculous risk and build on that land?

        This is my biggest problem with this entire dilemma. Beatty is willing to put up almost a billion dollars of private investment right now in a very risky endevour. You are talking about some possible fantasy investor who will come to the rescue in the future, maybe, kinda, if we’re lucky….

        Nobody is getting hurt from the Harbor Point project. The only losers here are people’s egos and extraneous political ideologies. If developers were trying to bulldoze an existing community or something it would be a different story, but there is no such situation here.

        The fact of the matter is that the tax rate is too high to attract any sort of significant investment into the city compared to the surrounding jurisdictions. The only way you are going to attract any large private investment within the city limits will be through tax incentives. This is nothing new and no surprise to anyone. You can complain about the “1%” and rates of return all you want, but at the end of the day Baltimore will continue to slug along until the tax and business environment improves.

        • Gerald Neily

          Well then, Danowski, let’s improve the tax and business environment. And that starts by using precious tax money for what is truly needed, not $80M gilding the lily. Also, Harbor Point’s development clock did not start ticking in 1999. It had to wait at least until the full build-out of Harbor East.

          • Matthew Danowski

            What tax money? Where is this money coming from to lower overall tax rates? You are making the same mistake everyone else opposing this is; that there is some fantasy pot of money which can be spent elsewhere if Harbor Point doesn’t move forward.. There isn’t. If Harbor Point doesn’t happen, there will be added no taxes in both the present and future. How hard is this to understand?

            At least with the development moving forward you can get the 3.2% income tax from the new wealthy residents living there. This isn’t even mentioning the increased attractiveness for the general area and the city as a whole.

            Also, if I remember correctly, Harbor East was (is?) the recipient of an extensive amount of tax breaks. As you use that as an example of a successful development, I don’t know why you would oppose the TIF now for Harbor Point.
            Harbor East was a series of parking lots before the city put the incentive in to build there. Coincidentally enough, Harbor Point shares a similar situation.

    • cwals99

      Matthew,

      Do you know that all of what tax revenue generated from these Enterprise Zones are fenced into those communities…they do not help greater Baltimore. Tax base from Greater Baltimore is used to not only subsidize these Enterprise Zones now, but revenue is frozen into the future…ergo….paying Rain taxes, privatizing trash collection, crumbling schools and parks. It is not better to build on toxic land than allow it to simply be a green space….that is the Sustainable policy solution. Building a huge complex on toxic land when we know that global warming will raise the sea level as much as 10 inches in just a few decades means the public will be called to build sea walls to protect this complex and compromise the toxic containment, All for more poverty jobs that we all know are filled with wage theft and workplace abuse.

      The development plan for a city filled with working class people would have been the real Enterprise Zone….one that builds small businesses with regional business owners so the grassroots would grow and create health communities. What we have is a handing off …..many will say a looting of our public assets in order to enrich a few and create more wealth inequity-style development. Please do not allow these 1% decide that the global corporations will control all business and consumption because this is what these policies move forward!

  • Baltimore resident

    The people that are so against the TIF are having problems understanding that no one else wants to develop there. We have an opportunity to develop the barren wasteland that is harbor point into an excellent development that will turn into another harbor east. I know some people don’t want luxury development unless they get to live there. You have to understand the additional tax revenue will help the city in its entirety. It will also boost tourism and put Baltimore on the map. If we don’t approve the TIF, there is no development, there is no job creation. It takes money to make money people, this is nothing new, and we are lucky that the only cash required of the city will come from increased tax revenue on the property. It will be a shame if the TIF doesn’t get approved and Exelon just occupies existing downtown offices. Nothing new or exciting will come of that. This is an opportunity to revitalize an empty lot into something great, people need to have the long view on this transaction and realize its a smart idea for the City of Baltimore.

    • Lizzie 58

      Nothing new of exciting will come from Exelon staying in the historic downtown of Baltimore? How about we don’t let the Central Business District, along with the historic Charles and Pratt Streets that really represent downtown for most Baltimoreans, continue to slide down and become an area of vacant buildings and unkept streets? How about the City does the same level of investment for the west side of downtown that it did for for Harbor East for twenty plus years? How about some investment in a City neighborhood that is not a waterfront neighborhood? How about not letting a developer have city assistance on every project he does in the City and telling to use his his own money? How about thinking that the rest of us City residents count?

      • Baltimore resident

        The historic downtown buildings that are vacant are being rehabbed to provide for the huge rental shortage in downtown Baltimore. Those buildings don’t need to be filled with Exelon workers to be successful. The more residents that live in the downtown area, the more additional investment and new businesses will pop up to accommodate them. Developing on the waterfront is common sense and it will bring more tourists and make Baltimore a hub for all kinds of activity. Developing in a random part of the city will not draw tourists, but will better the livelihoods of the locals. This is great for locals but doesn’t do anything for the City. Harbor Point may only seem to benefit the waterfront residents but actually will contribute much more to the city as a whole, such as tax revenue, tourism, construction jobs etc. People like to visit central locations that are a hub for entertainment, Harbor Point presents that opportunity.

        • Lizzie 58

          Got new for you. Downtown has a lot of office buildings. Baltimore will never be New York; not all of these office buildings will be converted to residential uses. The City residents and taxpayers–the people you sarcastically describe as “locals”– should not have to subsidize the slow death of its downtown area. Harborpoint is not downtown, and Michael Beatty, a guy from New York who lives in the county, should not get the right to kill off our downtown using our tax dollars. The City taxpayers gave millions of dollars for Harbor East. We have done enough for Michael Beatty. It is time to focus on another part of the City. Baltimore– One City, not just a waterfront.

    • bmorepanic

      What qualities of an energy company headquarters and some generic office buildings is going to generate tourism? Will people think its a much better designation than, say, a Google headquarters building?

      Office parks aren’t very interesting by themselves. I can’t recall anyone who ever said “Oh, let’s go look at the BGE headquarters building.”

      What would a tourist tour? An environmental caution placard? An exhibit of toxic waste sites in Baltimore? A park smaller than a lot of yards in the county?

  • wje811

    Should you build a park on the protective clay & plastic cap [ that is only 5′ thick ] and construct all the infrastructure that goes with a park [ many years down the road ]? The chromium is under that cap. It did not go away.

    • rkolberg

      Actually, a whole lot of that chromium was dumped in a state-owned landfill in Hawkins Point, contaminating the wells and thereby decimating a black waterfront community near the Baltimore-Anne Arundel County line. Too bad that’s how city and state environmental officials so often think–out of sight, out of mind.

      • baltimorebrew

        Yes, the hazardous wastes “generated” by the dismantlement of the factory were disposed at Hawkins Point, while polluted bottom sediments dredged from the harbor during the embankment construction were deposited at Hart-Miller Island. –mr

        • wje811

          There is chromium contamination under that site. They did not take away all the soil and rock, all the way down to bedrock, that was contaminated. Insanely expensive to do this. This explains the need for the cap and the walls[ 3] keeping the contamination from getting into the harbor. I read where 50 plus pounds of chromium leach into the harbor each year. This is what is allowed by Maryland & the EPA.

  • cwals99

    This is a petition started by the Baltimore Business Networking group. You can bet they will have a stronger presence at these public comment meetings so we need labor and justice organizations to stand out and shout out. WE DO NOT WANT LABOR BACKING WHAT WE KNOW ARE TEMPORARY JOBS/POVERTY JOBS NOT GOOD FOR THE CITY AT LARGE! This TIF is obvious racketeering as it has no value for the public. Exelon is required to build/stay in Baltimore and does not need to have incentive. These TIFs will continue to be given as a matter of allowing all businesses to escape paying any taxes…..which is to where these policies are going. Taxes on middle/lower class will rise to take the place of corporate revenue…which is already happening!

    Petitioning Carl Stokes, Baltimore City Council, Stephanie Rawlings-Blake

    Carl Stokes, Baltimore City Council, Stephanie Rawlings-Blake: Pass the TIF for Harbor Point

    Petition by

    Victoria Fitch

    Baltimore, MD

    Harbor Point is a
    world-class mixed use development on Baltimore’s waterfront that will
    provide immediate and lasting benefits for the city to include:

    An estimated 7,175 construction jobs.
    An estimated 6,611 permanent jobs.
    An estimated 2,547 indirect jobs.

    Attract approximately 2,070 residents – the majority new to Baltimore

    $589 Million in net fiscal revenue increases over 30 years

    15% profit share of all net revenue over 20% return on investment

    9.5 acres of waterfront park space

    ½ mile of new public waterfront promenade – completing the promenade from Canton to Locust Point

    Expand and enhance the Crossroads Academy public charter school

    Inclusionary hiring practices that will provide maximum opportunities
    to Baltimore city residents, minority owned and women owned businesses

    It is for all the reasons stated above, and many more, that
    we whole-heartedly support TIF financing for the Harbor Point
    development.

    • Day_Star

      cwals99:
      “We do not want backing [of] temporary jobs”
      — Construction workers (especially ex cons) need new work to stay employed, become skilled, and develop their careers. Building operations and maintenance, as well as tenant services, are permanent jobs, in addition to 9-5ers.

      “These TIF’s will be given [to allow] businesses to escape paying any taxes” — Wrong. Wrong. Wrong. TIF stands for “Tax Increment Financing”. Again, the increment, ie. tax increase on development, pays down the TIF bond. If taxes didn’t increase, TIF financing would not be possible b/c lenders would not be repaid. Cross my heart, I swear.

      “Exelon is required to build/stay in Baltimore and does not need to have incentive.” — What is the mechanism for enforsing their pledge? What is the time lapse on such a pledge? I don’t know the answer, but I’m guessing they’re required to use “good faith efforts”. Lack of City support is the perfect excuse to back-out.

      “Taxes on middle/lower class will rise to take the place of corporate revenue…which is already happening” — Source? If corporate revenue has decreased, it’s because corporations and small businesses have left Baltimore for the suburbs and elsewhere.

      • Matthew Riesner

        I know that there are many people who don’t believe it but there are many professionals who live in Baltimore who will work at the site. I think the real problem is that city is not actively attracting tenants the downtown real estate that will be vacated due to this development by creating incentives and wide scale tax breaks.

      • Matthew Danowski

        Also, Excelon is required to stay/build in Baltimore, but for how long and to what extent? What is keeping them from building a small two story office building in a less densely populated area of town and keeping a small contingent of local operations here? What is keeping them from moving those operations back to Chicago in 5-10 years?

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